United States District Court, D. South Dakota, Southern Division
LARSON MANUFACTURING COMPANY OF SOUTH DAKOTA, INC., SUPERIOR HOMES, LLC, Plaintiffs,
WESTERN SHOW HOMES, INC., AMERICAN MODULAR HOUSING GROUP, LLC, AMERICAN MODULAR HOUSING GROUP, INC., PAUL THOMAS, Defendants.
ORDER DENYING DEFENDANTS' MOTION TO FILE
THIRD-PARTY COMPLAINT DOCKET NO. 13
VERONICA L. DUFFY United States Magistrate Judge
matter is before the court on the basis of diversity
jurisdiction, 28 U.S.C. § 1332, after defendants removed
the matter from South Dakota state court. See Docket
No. 1, 1-1. Defendants now seek permission to file a
third-party complaint adding claims against six new
third-party defendants. See Docket No. 13, 13-1.
Plaintiffs oppose the motion. See Docket No. 15. The
court denies the motion for the following reasons.
following facts are taken from plaintiffs' amended
complaint. The recitation of these facts should not be
interpreted as the court's imprimatur of the verity of
the facts. Rather, they are recited to frame the claims in
order to evaluate defendants' pending motion.
Larson Manufacturing Company of South Dakota, Inc. (Larson)
is the parent company of plaintiff Superior Homes, LLC
(Superior). See Docket No. 1-6 at 4. Both are South
Dakota business entities. Id. Superior is in the
business of manufacturing and selling modular homes.
Western Showcase Homes, Inc. ("Western") is a
Nevada corporation in the business of purchasing, reselling,
and financing modular homes. Id. at 5. Defendant
Paul Thomas, a Nevada resident, is the sole member of
American Modular Housing Group, LLC (AMHG, LLC), a Nevada
company in the business of buying and reselling modular
homes. Id. American Modular Housing Group, Inc.
(AMHG, Inc.), is a Canadian corporation with its principal
place of business in Nevada that also buys and resells
modular homes. Id. Thomas is the principal agent and
owner of both AMHG entities. Id.
defendant entities would purchase modular homes from Superior
and then re-sell those homes to customers, sometimes
arranging for delivery, set and completion of the home at the
customer's location. Id. Larson and Superior
extended credit to the defendant entities for these
purchases; AMHG would then repay the loans when its customer
paid the defendant entities. Id. at 6.
complaint recites that defendant entities placed orders for
26 modular homes with plaintiffs. Plaintiffs constructed the
homes. Of the homes that were delivered to defendants, full
payment was never made although the complaint alleges the
ultimate customers who received these homes paid defendants.
Other modular homes ordered by defendants were custom-built
and never delivered because defendants never paid for the
homes. As to the homes plaintiffs retain possession of,
plaintiffs allege the custom nature of the homes makes resale
of the homes at a reasonable value impracticable.
addition, Larson entered into a loan agreement with Western
which was guaranteed by AMHG, Inc. This loan agreement
ultimately encompassed $14 million in funds. Larson alleges
that Western defaulted on the loan and AMHG, Inc. refused to
pay pursuant to its guarantee. For all these matters,
plaintiffs assert eight counts of breach of contract, five
counts of unjust enrichment, two counts of tortious
interference with business expectancy, three counts of fraud,
two counts of conversion, one count each of debt and
guarantee, and one count of piercing the corporate veil.
generally deny nearly all of plaintiffs' allegations in
their amended complaint. See Docket No. 6 at 1-16.
In addition, defendants assert five counterclaims against
Larson and Superior. Id. at 17-27. Those
counterclaims include breach of contract (failure to pay
rebates, failure to pay personal loans from Thomas); unjust
enrichment (rebates, warranty and service fees); tortious
interference with business expectancy (Aspen Links Country
Club, Aspen Village Properties, and Waugh Who Developments);
breach of contract (manufacturing defects in modular homes);
and fraud and deceit (fraudulent inducement to sign a
mortgage in connection with Aspen Village and McKenzie Lane,
assignment of mortgage interest in Moose Ridge). See
Docket No. 6 at pp. 17-27. Defendants seek compensatory and
punitive damages on their counterclaims, pre- and
post-judgment interest, attorney's fees, and other
remedies. Id. at 27.
now seek to file a third-party complaint pursuant to Federal
Rule of Civil Procedure 14(a)(1). See Docket No. 13,
13-1. That third-party complaint, if allowed, would add the
following parties: William Retterath, Greg Jahnke, Rylan
Waugh, Aspen Village Properties, Ltd., Mauri Gwyn
Development, Ltd.; and Waugh Who Developments, Ltd. as
parties. Id. at 1. Five of the six new parties
defendants seek to add are citizens and residents of Canada.
Id. at 2-4. The third-party complaint would assert a
claim of tortious interference with contract or business
expectancy against all the new parties. Id. at 5-7.
It would assert claims of defamation against Jahnke and
Retterath. Id. at 7. It would assert claims of
breach of contract against Aspen Village, Mauri Gwyn, and
Waugh Who. Id. at 8-10. And it would seek punitive
damages against Retterath. Id. at 10.
is the only proposed new party who is a resident of the
United States. Id. at 2-3. He is the Chief Financial
Officer of plaintiff Larson and resides in Brookings, South
oppose defendants' request to file the proposed
third-party complaint. See Docket No. 15. They
assert Rule 14(a)(1) does not authorize defendants'
third-party complaint. Id. at 1-5. Plaintiffs also
assert they would be ...